Technology, ‘Know How’ Are Key To Efficient Route Management

U.S.A. — Bulk vending, which was perhaps a little slow to jump on the hi-tech bandwagon, is now a computerized industry. In a recent, albeit unscientific survey of small to mid-sized operators, virtually all of them responded that they use at least one computer to run their routes, track inventory and monitor sales.

“I don’t know how you can run a route without a computer – or any business at this point,” said Scott Schill of Gums ‘n Roses (Martinsburg, WV). “Right now we use it for our expenses and to keep track of our purchases that we make. But now I’m considering switching to route management software, in fact I spoke to a guy about it last week.” Schill, of course, is not alone. Like many operators, he has discovered that the more technology can do for him, the more he wants it to do. In order to survive, small operators are now using the same type of quantifiable data that large operators are required to provide to their chain accounts.

That so many operations of all sizes are relying more heavily on technology is the good news. The bad news is that many of them may not be using their systems to their best advantage. For these operators, the technology is either not working to its full potential or the data entered is corrupted by miscalculations, providing them with inaccurate conclusions, creating a “garbage in – garbage out” scenario.

Ideally, an automated system will track product from initial order all the way through sales, though this is easier said than done. The typical bulk vending operator not only relies on multiple suppliers for a myriad of products, but sells those products at multiple price points. A typical location in a small grocery store may feature a dozen or more different products, such as ball gum, capsuled novelties and flat vendibles, all purchased from different companies at varying costs and sold at different retail prices. Singling out the most profitable items is no easy task.

“It’s one of the hardest parts of our industry because it’s so hard to control,” said Frank LaVecchia, Jr., Tropical Vending Inc. (Cataño, PR). “There are so many different items, so many different sizes and so many different counts of gum and candy. Yet, it’s so important that an operator keep track.”

According to LaVecchia and other industry pros, a computerized system not only keeps track of what goes out of the warehouse, but it also counts the amount of money coming back in. This cuts down on what some operators politely call “shrinkage,” while those less polite might term the phenomenon “thievery.” Nonetheless, even if shrinkage isn’t a factor, as with many small operators who service their own machines, precise tracking of products and warehouse management is still critical. Accurate tracking along an operator’s supply chain allows him to order the right product in the right quantities. For operators who have seen their profit margins dwindle due to increased merchandise cost and growing overheads by way of higher gas prices and shipping, accurate tracking can be the difference between success and failure.

Affirmed Ken Recker, vice-president of Vendomatic (Everett, PA): “Every percentage point that you can save by tracking is valuable because of rising costs.”

SOFTWARE IS KEY

Among the most popular programs used by bulk vending operators is the line of “QuickBooks” products by Intuit Inc. An industry standard for small- to medium-sized businesses, “QuickBooks,” “Quicken” and the firm’s “TurboTax” offerings seem highly compatible to the fast-moving, multi-product world of bulk vending. Although a “generic” software package, the Intuit product line was designed to be highly flexible when it comes to small businesses with rapidly cycling inventory.

“Our entire operation is computerized,” said Audrey Freshman of Kworterz Vending Inc. (Punta Gorda, FL). “We’ve basically created our own program from ‘Quicken’ that was quick and easy. This helps keep track of products leaving and coming into the warehouse. It helps us keep our products fresh, because we make a point of having new products in our mall locations.”

There are, of course, other programs out on the market today aimed specifically at the coin-op industry. Coin ConneXion’s “ezRoute” system, designed for full-line or music and games operators, has also proven itself in the world of bulk vending. “A program like ‘QuickBooks’ is fine for generic accounting applications, but many operators want something industry specific,” said Coin ConneXion’s Dave Jensen. “For instance, if you want to do a ranking of specific machine type, that’s an industry specific application. What most of our clients do is store everything in our system and summarize it in ‘QuickBooks’ for accounting. But anything on the income side of the ledger is stored in our system.”

Coin ConneXion’s system relies on a proprietary handheld reader called the “Dolphin” that features a laser scanner for reading barcodes, a keyboard (rather than a stylus) for data entry and an infrared link for reading and exporting to wireless printers for creating receipts.

Other systems suitable for bulk vending have also come on the market in recent years. Nova Industries’ “EZcount” system allows operators to read metered machines with a handheld device, then upload the data to computers to create real-time reports to assess a location’s performance and product preferences.

A similar package created by SmartMech also allows for reading metered machines by way of an infrared link. Currently in its “beta test” phase, according to company officials, the system should hit the market in several months. “As operators become more transaction-oriented in their reconciliation and transaction analysis, new features such as warehouse management will become very important,” said SmartMech’s Jens Ronneberger. “First, there’s route management and location management, then inventory management is really the next big topic after that.”

Another option that’s becoming increasingly popular among even small- to mid-sized operators is custom packages designed specifically for their businesses. Although significantly more pricey than off-the-shelf software, operators have reported varying degrees of success with such systems. Most often designed by a programmer friend or relative of the operator, the one advantage custom products possess is their ability to mirror the operator’s priorities. For instance, for an operator who places a high value on calculating the total cost per service call, including hourly personnel costs, such a system would provide the data.

However, according to the pros, operators should be warned that technology is not the total solution for taming the complexities of warehouse, inventory and purchasing management. Although mundane, these tasks will likely continue to plague operators no matter how much they rely on technology. Order a lot of product and you may save on shipping and price per item, but that will tie up a significant amount of capital in inventory. On the flip side, the operator who cautiously orders too little product, not only pays more in shipping and price per piece, but also takes the risk of running short on a hot item. Add in to those chores the inherently fickle nature of bulk vending customers who clean out machines one month only to turn up their noses at the same product a few weeks later.

“There’s no exact science to it,” said one mid-sized operator. “A lot of it is determined by what’s going on in the marketplace. If you have a hot item, you buy more. But first you have to identify that hot item.”

Operators, according to some industry experts, shouldn’t rely solely on quantifiable, computerized data to identify a hot item. With service calls sometimes spread a month or more apart, the operator who waits for all the data to come in could be losing valuable weeks of strong sales. “The drivers call in when they get a new item and report,” explained Recker. “And our territory managers have test stores, and they can tell us what that item is doing before we order in quantity.”

According to Freshman, what sounds like a simple task is highly complex. “You really have to be organized,” she said. “It sounds like it’s no big deal, but it’s actually a lot of work. We try to have at least two months’ worth of inventory on hand, if not a little more, because you never know if you’re going to open a new location. If a location calls and says, ‘we want to go tomorrow,’ you can’t wait 30 days for product to come in.”

And then there’s the issue of how much product to load on a truck that is about to service a route. Running short of merchandise while on a route not only eats up time, but also gas. “That takes lots of experience,” explained remarked. “For instance, we know each mall will take x amount of certain products, but then you have new product, and that’s just trial and error.”